Auditor Report of Nagarjuna Oil Refinery Ltd.

Mar 31, 2016

Independent Auditors'' Report

To

The Members of

Nagarjuna Oil Refinery Limited

Report on the Standalone Financial Statements

We have audited the accompanying Standalone Financial Statements of Nagarjuna Oil Refinery Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2016, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of the significant accounting policies and other explanatory information (here in referred to as "the Standalone Financial Statements"). Management''s responsibility for the Standalone Financial Statements The Company''s Board of Directors is responsible for the matters stated insertion 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these Standalone Financial Statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company andforpreventinganddetectingfraudsandotherirregularities;selectionandapplication of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Standalone Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these Standalone Financial Statements based on our audit.

We have taken into account the provisions of the Act, the Accounting and Auditing Standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Standalone Financial Statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone financial statements. The procedures selected depend on the auditors'' judgment, including the assessment of the risks of material misstatement of the Standalone Financial Statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the Standalone Financial Statements that give a true and Fairview in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the Standalone Financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Standalone Financial Statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Financial Statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31,2016 and its loss and its cash flows for the year ended on that date. Emphasis of Matter

We draw attention to Note 11.1 to the standalone financial statements regarding provision made towards diminution in the value of the investment in Nagarjuna Oil Corporation Limited and its adequacy as on March 31,2016 based on the management assessment, for the reasons stated in the said note.

Our opinion is not modified in respect of the above matter.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143 (3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

(c) The Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the afore said Standalone Financial Statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(e) On the basis of the written representations received from the directors as on March 31,2016 taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2016 from being appointed as a director in terms of Section 164 (2) of the Act.

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, we give our separate Report in "Annexure A".

(g) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule ll of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of all pending litigations on its financial position in its Standalone Financial Statements - refer Note 21.1 to the Standalone Financial Statements.

ii. The Company did not, as at March 31,2016, have any material foreseeable losses relating to long-term contracts including derivative contracts.

iii. There are no amounts which are required to be transferred to the Investor Education and Protection Fund by the Company.

2. As required by the Companies (Auditors Report) Order, 2016 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in the "Annexure B", a statement on the matters specified in paragraphs 3 and 4 of the Order.

Annexure B to the Independent Auditors'' Report

(Referred to in paragraph 2 under âReport on Other Legal and Regulatory Requirements'' section of our report of even date)

(i) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of its fixed assets.

(b) According to the information and explanation given to us, the fixed assets have been physically verified by the Management during the year. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and the nature of the assets. According to the information and explanations given to us, no discrepancies were noticed on such verification.

(c) According to the information and explanations furnished to us, and based on our review, title deeds of its immovable properties are in the name of the Company.

(ii) As the Company has no inventory, re porting under paragraph 3(ii) of the Order does not arise.

(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms. Limited Liability Partnerships or other parties covered in the Register maintained under Section 189 of the Companies Act, 2013. Accordingly, reporting under clauses (a), (b) and (c) of paragraph 3(iii) of the Order does not arise.

(iv) According to the information and explanations furnished to us, the Company has not granted any loans, nor made any investments or given any guarantees or securities during the year to any of the parties specified in Sections 185 and 186 of the Companies Act, 2013. Hence, reporting under provisions of paragraph 3(iv) of the Order does not arise.

(v) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits. Accordingly, reporting under provisions of paragraph 3(v) of the Order does not arise.

(vi) In our opinion and according to the information and explanations given to us, the Central Government has not prescribed maintenance of cost records under Section 148(1) of the Companies Act, 2013 for the activities of the Company.

(vii) According to the information and explanations given to us, in respect of statutory dues:

(a) The Company has been generally regular in depositing undisputed statutory dues, including Provident Fund, Employees'' State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues applicable to it with the appropriate authorities, and there were no amounts payable in respect of the aforesaid undisputed statutory dues in arrears, as at March 31,2016, for a period of more than six months from the date they became payable.

(b) There were no amounts payable in respect of Provident Fund, Employees'' State Insurance, Sales Tax, Income-tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues as at March 31,2016 which have not been deposited on account of dispute.

(viii) According to the information and explanations given to us, the Company has not availed any loans from financial institutions, banks, government or from debenture holders. Accordingly, reporting under provisions of paragraph 3(viii) of the Order does not arise.

(ix) According to the information and explanations furnished to us, the Company has, during the year under report, not raised any monies through initial public offer or further public offer of any of its securities or term loans. Hence, reporting under provisions of paragraph 3(ix) of the Order does not arise.

(x) According to the information and explanations furnished to us, no fraud by the Company, nor any fraud on the Company by any of its officers or its employees has been noticed or reported during the year under report.

(xi) According to the information and explanations furnished to us by the Company, the Company has, during the year under report, paid / provided for managerial remuneration in accordance with Section 197 read with Schedule V of the Companies Act 2013.

(xii) lnouropinion,reportingrequirementunderParagraph3(xii)oftheorderdoesnot arise since, according to the information and explanations furnished to us, the Company is not a Nidhi Company

(xiii) According to the information and explanations furnished to us, the transactions entered into by the Company with its related parties are in compliance with the requirements of the provisions of Sections 177 and 188 of the provisions of the Companies Act 2013.

(xiv) According to the information and explanations furnished to us, the Company has not made any preferential allotment or private placement of its shares or fully or partly convertible debentures during the year under report.

(xv) According to the information and explanations furnished to us, the Company has not entered into any agreements for acquisition of assets from or for transferring its assets to its directors, or the directors of its subsidiary companies or persons connected with such directors, for a consideration other than cash, during the year underreport.

(xvi) According to the information and explanations furnished to us, the Company submitted its application for registration under Section 45-IA of the Reserve Bank of India Act 1934 which is pending clearance by Reserve Bank of India.

for M. Bhaskara Rao & Co

Chartered Accountants

Firm Registration No. 000459S

Hyderabad, D.Bapu Raghavendra

May 28, 2016 Partner

Membership No. 213274

Mar 31, 2015

We have audited the accompanying standalone financial statements of
Nagarjuna Oil Refinery Limited ("the Company"), which comprise the
Balance Sheet as at March 31, 2015, the Statement of Profit and Loss
and the Cash Flow Statement for the year then ended and a summary of
the significant accounting policies and other explanatory information.
Management's Responsibility for the Standalone Financial Statements The
Company's Board of Directors is responsible for the matters stated in
Section 134(5) of the Companies Act, 2013 ("the Act") with respect to
the preparation of these standalone financial statements that give a
true and fair view of the financial position, financial performance and
cash flows of the Company in accordance with the accounting principles
generally accepted in India, including the Accounting Standards
specified under Section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014. This responsibility also includes
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and
for preventing and detecting frauds and other irregularities; selection
and application of appropriate accounting policies; making judgments
and estimates that are reasonable and prudent; and design,
implementation and maintenance of adequate internal financial controls,
that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and
presentation of the financial statements that give a true and fair view
and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone
financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting
and auditing standards and matters which are required to be included in
the audit report under the provisions of the Act and the Rules made
there under.

We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act. Those Standards require
that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the standalone financial
statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about
the amounts and the disclosures in the standalone financial statements.
The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the standalone
financial statements, whether due to fraud or error. In making those
risk assessments, the auditor considers internal financial control
relevant to the Company's preparation of the standalone financial
statements that give a true and fair view in order to design audit
procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on whether the Company has in place an
adequate internal financial controls system over financial reporting
and the operating effectiveness of such controls. An audit also
includes evaluating the appropriateness of the accounting policies used
and the reasonableness of the accounting estimates made by the
Company's Directors, as well as evaluating the overall presentation of
the standalone financial statements.

We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion on the standalone
financial statements.

Opinion

In our opinion and to the best of our information and according to the
explanations given to us, the aforesaid standalone financial statements
give the information required by the Act in the manner so required and
give a true and fair view in conformity with the accounting principles
generally accepted in India, of the state of affairs of the Company as
at March 31, 2015, and its loss and its cash flows for the year ended
on that date.

Emphasis of Matter

We draw attention to Note 11.1 to the standalone financial statements
regarding provision made towards diminution in the value of the
investment in Nagarjuna Oil Corparation Limited based on the Management
assessment, for the reasons stated in the said note.

Our opinion is not modified in respect of above matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 ("the
Order") issued by the Central Government in terms of Section 143(11) of
the Act, we give in the Annexure a statement on the matters specified
in paragraphs 3 and 4 of the Order.

2. As required by Section 143 (3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations
which to the best of our knowledge and belief were necessary for the
purposes of our audit.

(b) In our opinion, proper books of account as required by law have
been kept by the Company so far as it appears from our examination of
those books.

(c) The Balance Sheet, the Statement of Profit and Loss and the Cash
Flow Statement dealt with by this Report are in agreement with the
books of account.

(d) In our opinion, the aforesaid financial statements comply with the
Accounting Standards specified under Section 133 of the Act, read with
Rule 7 of the Companies (Accounts) Rules, 2014.

(e) On the basis of the written representations received from the
directors as on March 31, 2015 taken on record by the Board of
Directors, none of the directors is disqualified as on March 31, 2015
from being appointed as a director in terms of Section 164 (2) of the
Act.

(f) With respect to the other matters to be included in the Auditor's
Report in accordance with Rule 11 of the Companies (Audit and Auditors)
Rules, 2014, in our opinion and to the best of our information and
according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its
financial position in its standalone financial statements - refer Note
20.1 to the standalone financial statements

ii. The Company did not have any material foreseeable losses relating
to long-term contracts including derivative contracts.

iii. There are no amounts, which are required to be transferred, to the
Investor Education and Protection Fund by the Company.

ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory
Requirements' section of our report of even date)

(i) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets.

(b) According to the information and explanation given to us, the fixed
assets have been physically verified by the Management during the year.
In our opinion, the frequency of verification is reasonable having
regard to the size of the Company and the nature of the assets.
According to the information and explanations given to us, the
discrepancies have been noticed on such verification.

(ii) As the Company has no inventory, clauses (a), (b) and (c) of the
paragraph 4(ii) of the Order are not applicable to the Company.

(iii) According to the information and explanations given to us, the
Company has not granted any loans, secured or unsecured, to companies,
firms or other parties covered in the Register maintained under Section
189 of the Companies Act, 2013. Accordingly, clause (b) of the
paragraph 4(iii) is not applicable to the Company.

(iv) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business for
purchase of services and during the course of our audit we have not
observed any major weaknesses in such internal control system.

(v) In our opinion and according to the information and explanations
given to us, the Company has not accepted any deposits. Accordingly,
the provisions of paragraph 4(v) of the Order are not applicable to the
Company.

(vi) In our opinion and according to the information and explanations
given to us, the Central Government has not prescribed maintenance of
cost records under Section 148(1) of the Companies Act, 2013 for the
activities of the Company.

(vii) According to the information and explanations given to us, in
respect of statutory dues:

(a) The Company has been generally regular in depositing undisputed
statutory dues, including Provident Fund, Employees' State Insurance,
Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise
Duty, Value Added Tax, Cess and other material statutory dues
applicable to it with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Provident
Fund, Employees' State Insurance, Sales Tax, Income-tax, Wealth Tax,
Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and other
material statutory dues in arrears as at March 31, 2015 for a period of
more than six months from the date they became payable.

(c) There were no dues of Income-tax, Sales Tax, Service Tax, Customs
Duty, Excise Duty, Value Added Tax and Cess which have not been
deposited as on March 31, 2015 on account of any dispute.

(d) According to the information and explanations given to us, no
amount is required to be transferred to the Investor Education and
Protection Fund in accordance with the relevant provisions for the
Companies Act, 1956 and the rules made there under.

(viii) The Company is in existence for a period less than five years;
therefore reporting on accumulated losses under provisions of paragraph
4(viii) of the Order are not applicable to the Company.

(ix) According to the information and explanations given to us, the
Company has not availed any loans from banks and financial
institutions. Accordingly, provisions of paragraph 4(ix) of the Order
are not applicable to the Company.

(x) According to the information and explanations given to us, the
Company during the year has not given any guarantee for loans taken by
others from banks and financial institutions.

(xi) The Company has not availed any term loans. Accordingly,
provisions of paragraph 4(xi) of the Order are not applicable to the
Company.

(xii) To the best of our knowledge and according to the information and
explanations given to us, no fraud by the Company and no fraud on the
Company has been noticed or reported during the year.

We have audited the accompanying financial statements of Nagarjuna Oil
Refinery Limited ("the Company"), which comprise the Balance Sheet as
at March 31,2014, the Statement of Profit and Loss and the Cash Flow
Statement for the year then ended and a summary of significant
accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements Management is
responsible for the preparation of these financial statements that give
a true and fair view of the financial position, financial performance
and cash flows of the Company in accordance with the Accounting
Standards referred to in sub section (3C) of section 211 of the
Companies Act, 1956. This responsibility includes the design,
implementation and maintenance of internal control relevant to the
preparation and presentation of the financial statements that give a
true and fair view and are free from material misstatement, whether due
to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.

An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor''s judgement, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company''s preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances but not for the
purpose of expressing an opinion on the effectiveness of the Company''s
internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of the accounting
estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the
explanations given to us, the financial statements give the information
required by the Act in the manner so required and give a true and fair
view in conformity with the accounting principles generally accepted in
India:

(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2014;

(b) in the case of the Statement of Profit and Loss, of the Loss for
the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.

Emphasis of Matter

We draw attention to Note No 10.1 regarding opinion of the management
that no diminution is required to be made in the carrying value of
investment in associate company for the reasons stated in the said
note.

Our opinion is not qualified in respect of above matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order") issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Act, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:

a. we have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
audit;

b. in our opinion proper books of account as required by law have
been kept by the Company so far as appears from our examination of
those books;

c. the Balance Sheet, the Statement of Profit and Loss and the Cash
Flow Statement dealt with by this Report are in agreement with the
books of account;

d. in our opinion, the Balance Sheet, the Statement of Profit and
Loss and the Cash Flow Statement comply with the Accounting Standards
referred to in subsection (3C) of section 211 of the Companies Act,
1956;and

e. on the basis of written representations received from the
directors as on March 31,2014, and taken on record by the Board of
Directors,none of the directors is disqualified as on March 31, 2014,
from being appointed as a director in terms of clause (g) of
sub-section (1) of section 274 of the Companies Act, 1956.

Re: Nagarjuna Oil Refinery Limited

Annexure to the Independent Auditors'' Report

(Referred to in paragraph ''1'' under Report on Other Legal and
Regulatory Requirements section of our report of even date)

(i) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.

(b) According to the information and explanations given to us, the
fixed assets have been physically verified by the management during the
year. In our opinion, the frequency of verification is reasonable
having regard to the size of the Company and the nature of the assets.
According to the information and explanations given to us, no
discrepancies have been noticed on such verification.

(c) The Company has not disposed off any assets during the year;
hence clause (c) of paragraph 4(i) of the Order is not applicable to
the Company.

(ii) As the Company has no inventory, clause (a), (b) and (c) of
paragraph 4(ii) of the Order are not applicable to the Company.

(iii)(a) The Company has not granted any loan, secured or unsecured to
companies, firms or other parties covered in the register maintained
under Section 301 of the Companies Act, 1956. Accordingly, clause (b),
(c) and (d) of paragraph 4(iii) of the Order are not applicable to the
Company.

(b) According to the information and explanations given to us, the
Company has not taken any loan, secured or unsecured from companies,
firms or other parties covered in the register maintained under Section
301 of the Companies Act, 1956. Accordingly, clause (f) and (g) of
paragraph 4(iii) of the Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control systems commensurate
with the size of the Company and the nature of its business with regard
to purchase of fixed assets and for sale of goods and services. During
the course of our audit, we have not observed any major weakness in
such internal control system.

(v) (a) In our opinion and according to the information and
explanations given to us, there is no contract or arrangement that
needs to be entered in the register required to be maintained under
section 301 of the Companies Act, 1956. Accordingly, clause (b) of
paragraph 4(v) of the Order is not applicable to the Company.

(vi) The Company has not accepted any deposits from public.

(vii) The Company does not have internal audit system during the Year.

(viii) The Central Government has not prescribed maintenance of cost
records under Section 209(1) (d) of the Companies Act, 1956; hence
paragraph 4(viii) of the Order is not applicable.

(ix) (a) According to the information and explanations given to us, the
Company is regular in depositing undisputed statutory dues including
Provident Fund, Income-tax, Service Tax, cess and any other material
statutory dues applicable to it with the appropriate authorities during
the year.

(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of the aforesaid dues were
outstanding as at March 31, 2014 for a period of more than six months
from the date they became payable.

(c) According to the information and explanations given to us, there
are no dues of Sales tax / Income tax / Custom duty / Service tax /
Excise duty / cess which have not been deposited on account of any
dispute.

(x) The Company is in existence for a period less than five years;
therefore reporting on accumulated losses under paragraph 4(x) of the
Order is not applicable to the Company at present.

(xi) According to information and explanations given to us, the Company
has not availed any loans from banks and financial institutions.
Accordingly the provisions of paragraph 4(xi) of the Order is not
applicable to the Company.

(xii) According to the information and explanations given to us, the
Company has not granted any loans and advances on the basis of security
by way of pledge of shares, debentures and other securities.
Accordingly, the provisions of paragraph 4 (xii) of the Order is not
applicable to the Company.

(xiii) In our opinion, the Company is not a Chit fund/ Nidhi/ Mutual
benefit fund/ Society. Accordingly, the provisions of paragraph
4(xiii) of the Order is not applicable to the Company.

(xiv) In our opinion and according to the information and explanations
given to us, the Company does not deal or trade in shares, securities,
debentures and other investments. Accordingly, the provisions of
paragraph 4(xiv) of the Order is not applicable to the Company.

(xv) According to the information and explanations given to us, the
Company during the year has not given any guarantee for loans taken by
others from banks or financial institutions except sponsor undertaking
executed inrespect of loans availed by an associate company to the
Company.

(xvi) The Company has not availed any term loans. Accordingly, the
provisions of paragraph 4(xvi) of the Order is not applicable to the
Company.

(xvii) The Company has not raised any short term or long term
borrowings. Accordingly, the provisions of paragraph 4(xvii) of the
Order is not applicable to the Company.

(xviii) According to the information and explanations given to us, the
Company has not made preferential allotment of shares during the year
to parties and companies covered in the register maintained under
section 301 of the Companies Act, 1956.

(xix) According to the information and explanations given to us and the
records examined by us, the Company has not raised funds through
debentures, term loans taken from banks, financial institutions and
others both for Rupee loans and Foreign currency loans.

(xx) During the year covered by our audit, the Company has not raised
any money by public issues.

(xxi) During the course of our examination of the books and other
records of the Company carried out in accordance with the generally
accepted auditing practices in India and according to the information
and explanations given to us, no instance of fraud on or by the Company
was reported during the year, nor have we been informed of such case by
the management.

We have audited the accompanying financial statements of Nagarjuna Oil
Refinery Limited ("the Company"), which comprise the Balance Sheet as
at March 31, 2013, the Statement of Profit and Loss and the Cash Flow
Statement for the year then ended and a summary of significant
accountinq policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the Accounting Standards referred to in sub section (3C) of section 211
of the Companies Act, 1956. This responsibility includes the design,
implementation and maintenance of internal control relevant to the
preparation and presentation of the financial statements that give a
true and fair view and are free from material misstatement, whether due
to fraud or error. Auditor''s Responsibility

Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.

An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor''s judgement, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company''s preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances but not for the
purpose of expressing an opinion on the effectiveness of the Company''s
internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of the accounting
estimates made by management, as well as evaluating the overall
presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the
explanations given to us, the financial statements give the information
required by the Act in the manner so required and give a true and fair
view in conformity with the accounting principles generally accepted in
India:

(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2013;

(b) in the case of the Statement of Profit and Loss, of the Loss for
the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.

Emphasis of Matter

We draw attention to Note No 10.1 regarding opinion of the management
that no diminution is required to be made in the carrying value of
investment in associate company for the reasons stated in the said
note.

Our opinion is not qualified in respect of above matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order") issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Act, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:

a. we have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
audit;

b. in our opinion proper books of account as required by law have been
kept by the Company so far as appears from our examination of those
books;

c. the Balance Sheet, the Statement of Profit and Loss, and the Cash
Flow Statement dealt with by this Report are in agreement with the
books of account;

d. in our opinion, the Balance Sheet, the Statement of Profit and
Loss, and the Cash Flow Statement comply with the Accounting Standards
referred to in subsection (3C) of section 211 of the Companies Act,
1956;and

e. on the basis of written representations received from the directors
as on March 31, 2013, and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2013, from being
appointed as a director in terms of clause (g) of sub-section (1) of
section 274 of the Companies Act, 1956.

Re: Nagarjuna Oil Refinery Limited

Annexure to the Independent Auditors'' Report

(Referred to in paragraph ''1'' under Report on Other Legal and
Regulatory Requirements section of our reportfof even date)

(i) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.

(b) According to the information and explanations given to us, the
fixed assets have been physically verified by the management during the
year. In our opinion, the frequency of verification is reasonable
having regard to the size of the Company and the nature of the assets.
According to the information and explanations given to us, no
discrepancies have been noticed on such verification.

(c) The Company has not disposed off any assets during the year; hence
clause (c) of paragraph 4(i) of the Order is not applicable.

(ii) (a) As the Company has no inventory, clause (a), (b), and (c) of
paragraph 4(ii) of the Order are not applicable.

(iii) (a) The Company has not granted any loan, secured or unsecured to
companies, firms or other parties covered in the register maintained
under Section 301 of the Companies Act, 1956. Accordingly, clause (b),
(c) and (d) of paragraph 4(iii) of the Order are not applicable.

(b) According to the information and explanations given to us, the
Company has not taken any loan, secured or unsecured from companies,
firms or other parties covered in the register maintained under Section
301 of the Companies Act, 1956. Accordingly, clause (iii) (e), (f) and
(g) of paragraph 4(iii) of the Order are not applicable.

(iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control systems commensurate
with the size of the Company and the nature of its business with regard
to purchase of fixed assets and for sale of goods and services. During
the course of our audit, we have not observed any major weakness in
such internal control system.

(v) (a) In our opinion and according to the information and
explanations given to us, there is no contract or arrangement that
needs to be entered in the register required to be maintained under
section 301 of the Companies Act, 1956. Accordingly, clause (b) of
paragraph 4(v) of the Order is not applicable.

(vi) The Company has not accepted any deposits from public.

jvii) The Company does not have internal audit system during the Year.

(viii) The Central Government has not prescribed maintenance of cost
records under Section 209(1) (d) of the Companies Act, 1956; hence
paragraph 4(viii) of the Order is not applicable.

(ix) (a) According to the information and explanations given to us, the
Company is regular in depositing undisputed statutory dues including
Provident Fund, Income-tax, Service Tax, cess and any other material
statutory dues applicable to it with the appropriate authorities during
the year.

(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of the aforesaid dues were
outstanding as at March 31, 2013 for a period of more than six months
from the date they became payable.

(c) According to the information and explanations given to us, there
are no dues of Sales tax / income tax / custom tax / service tax /
excise duty / cess which have not been deposited on account of any
dispute.

(x) The Company is in existence for a period less than five years;
therefore reporting on accumulated losses under paragraph 4(x) of the
Order is not applicable.

(xi) According to information and explanations given to us, the Company
has not availed any loans from banks and financial institutions.
Accordingly the provisions of paragraph 4(xi) of the Order is not
applicable.

(xii) According to the information and explanations given to us, the
Company has not granted any loans and advances on the basis of security
by way of pledge of shares, debentures and other securities.
Accordingly, the provisions ot paragraph 4 (xii) of the Order is not
applicable.

(xiii) In our opinion, the Company is not a Chit fund/ Nidhi/ Mutual
benefit fund/ Society. Accordingly, the provisions of paragraph
4(xiii) of the Order is not applicable.

(xiv) In our opinion and according to the information and explanations
given to us, the Company does not deal or trade in shares, securities,
debentures and other investments. Accordingly, the provisions of
paragraph 4(xiv) of the Order is not applicable.

(xv) According to the information and explanations given to us, the
Company during the year has not given any guarantee for loans taken by
others from banks or financial institutions except sponsor undertaking
executed inrespect of loans availed by an associate company.

(xvi) The Company has not availed any term loans. Accordingly, the
provisions of paragraph 4(xvi) of the Order is not applicable.

(xvii) The Company has not raised any short term or long term
borrowings. Accordingly, the provisions of paragraph 4(xvii) of the
Order is not applicable.

(xviii) According to the information and explanations given to us, the
Company has not made preferential allotment of shares during the year
to parties and companies covered in the register maintained under
section 301 of the Companies Act, 1956.

(xix) According to the information and explanations given to us and the
records examined by us, the Company has not raised funds through
debentures, term loans taken from banks, financial institutions and
others both for Rupee loan and Foreiqn currency loans.

(xx) During the year covered by our audit, the Company has not raised
any money by public issues.

(xxi) During the course of our examination of the books and other
records of the Company carried out in accordance with the generally
accepted auditing practices in India and according to the information
and explanations given to us, no instance of fraud on or by the Company
was reported during the year, nor have we been informed of such case by
the management.

for M. Bhaskara Rao & Co.

Chartered Accountants

Firm Registration No. 000459S

M.V.Ramana Murthy

Hyderabad Partner

May 03, 2013 Membership No.206439

Mar 31, 2012

1. We have audited the attached balance sheet of Nagarjuna Oil
Refinery Limited as at 31st March 2012, the statement of profit and
loss for the year ended on that date and the cash flow statement for
the year ended on that date, both annexed thereto. These financial
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements
based on our audit.

2. We conducted our audit in accordance with the auditing standards
generally accepted in India. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003
('CARO') issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Companies Act, 1956, we enclose
in the Annexure a statement on the matters specified in paragraphs 4
and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3
above, we report that:

i) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
audit;

ii) In our opinion, proper books of account as required by law have
been kept by the company so far as appears from our examination of
those books;

iii) The balance sheet, statement of profit and loss and cash flow
statement dealt with by this report are in agreement with the books of
account;

iv) In our opinion, the balance sheet, statement of profit and Loss and
cash flow statement dealt with by this report are in compliance with
the accounting standards referred to in sub-section (3C) of section 211
of the Companies Act, 1956

v) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts read together with
notes and significant accounting policies thereon give the information
required by the Companies Act, 1956, in the manner so required and give
a true and fair view in conformity with the accounting principles
generally accepted in India:

a) in the case of the balance sheet, of the state of affairs of the
company as at March 31, 2012;

b) in the case of the statement of profit and loss , of the loss for
the year ended on that date; and

c) in the case of the cash flow statement, of the cash flows for the
year ended on that date.

5. On the basis of written representations received from the
directors, as on March 31, 2012 and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
March 31, 2012 from being appointed as a director in terms of clause
(g) of sub-section (1) of section 274 of the Companies Act, 1956.

Re: Nagarjuna Oil Refinery Limited
Annexure to the Auditors' Report

(Referred to in paragraph 3 of our report of even date)

(i) (a) The company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.

(b) According to the information and explanations given to us, the
fixed assets have been physically verified by the management during the
year. In our opinion, the frequency of verification is reasonable
having regard to the size of the Company and the nature of the assets.
According to the information and explanations given to us, no
discrepancies have been noticed on such verification.

(c) The Company has not disposed off any assets during the year; hence
paragraph (c) of clause 4(i) of this Order is not applicable.

(ii) (a) As the company has no inventory, Paragraphs (a), (b), and (c)
of clause 4(ii) of CARO are not applicable.

(iii) (a) The Company has not granted any loan, secured or unsecured to
companies, firms or other parties covered in the register maintained
under Section 301 of the Companies Act, 1956. Accordingly sub clauses
(b), (c) and (d) of clause 4(iii) of CARO are not applicable.

(b) According to the information and explanations given to us, the
Company has not taken any loan, secured or unsecured from companies,
firms or other parties covered in the register maintained under Section
301 of the Companies Act, 1956. Accordingly paragraphs (iii) (e), (f)
and (g) of clause 4(iii) of CARO are not applicable.

(iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control systems commensurate
with the size of the company and the nature of its business with regard
to purchase of fixed assets and for sale of goods and services. During
the course of our audit, we have not observed any major weakness in
such internal control system.

(v) (a) In our opinion and according to the information and
explanations given to us, there is no contract or arrangement that
needs to be entered in the register required to be maintained under
section 301 of the Act. Accordingly sub clause (b) of clause 4(v) of
CARO is not applicable.

(vi) The company has not accepted any deposits from public.

(vii) In our opinion, the clause 4(vii) of CARO relating to internal
audit is not applicable to the Company at present.

(viii) The Central Government has not prescribed maintenance of cost
records under Section 209(1) (d) of the Companies Act, 1956; hence
clause 4(viii) of CARO is not applicable.

(ix) (a) According to the information and explanations given to us, the
company is regular in depositing undisputed statutory dues including
Provident Fund, Employees' State Insurance, Income-tax, Wealth Tax,
Service Tax, Custom Duty, Excise Duty, cess and any other material
statutory dues applicable to it with the appropriate authorities during
the year.

(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of the aforesaid dues were
outstanding as at March 31, 2012 for a period of more than six months
from the date they became payable.

(c) According to the information and explanations given to us, there
are no dues of Sales tax / income tax / custom tax / wealth tax /
service tax / excise duty / cess which have not been deposited on
account of any dispute.

(x) The Company is in existence for a period less than five years;
therefore reporting on accumulated losses under clause 4(x) of the CARO
is not applicable.

(xi) According to information and explanations given to us, the company
has not defaulted in repayment of dues to Financial Institutions, Banks
and debenture holders.

(xii) According to the information and explanations given to us, the
company has not granted any loans and advances on the basis of security
by way of pledge of shares, debentures and other securities.
Accordingly, the provisions of para 4 (xii) of CARO are not applicable
to the Company.

(xiii) In our opinion, the company is not a Chit fund/ Nidhi/ Mutual
benefit fund/ Society. Accordingly, the provisions of para 4 (xiii) of
CARO are not applicable to the Company.

(xiv) In our opinion and according to the information and explanations
given to us, the company does not deal or trade in shares, securities,
debentures and other investments. Accordingly, the provisions of para 4
(xiv) of CARO are not applicable to the Company.

(xv) According to the information and explanations given to us, the
company during the year has not given any guarantee for loans taken by
others from banks or financial institutions.

(xvi) The company has not availed any term loans. Therefore the Clause
of 4(xi) of this Order is not applicable.

(xvii) The Company has not raised any short term or long term
borrowings. Therefore parties of clause 4(xvii) of CARO is not
applicable.

(xviii) According to the information and explanations given to us, the
Company has not made preferential allotment of shares except equity
shares allotted in pursuance of approved Scheme of Arrangement and
Amalgamation (refer Note 1 to the financial statements) during the year
to parties and companies covered in the register maintained under
section 301 of the Companies Act, 1956.

(xix) According to the information and explanations given to us and the
records examined by us, the company has not raised funds through
debentures, term loans taken from banks, financial institutions and
others both for Rupee loan and Foreign currency loans.

(xx) During the year covered by our audit, the company has not raised
any money by public issues.

(xxi) To the best of our knowledge and belief and according to
information and explanations given to us, no fraud on or by the company
was noticed or reported during the year.